Not very many! Opti Canada's stock has gotten destroyed which implies bad things for the bonds and means we can't hedge by shorting the stock. We already follow and own Callon Petroleum.

The most interesting for further study look like ATP Oil & Gas (ATPG) and Delta Petroleum (DPTR). Quick calculation, it looks like DPTR has an EV/market value of debt around 7x. ATPG's is also high but I know they have a lot of new production coming online. I will take a closer look.

5 comments:

ATPG is my biggest holding right now, although my upside is somewhat capped. I bought a ton of the Jan 12 calls at a strike of 10, and sold the corresponding Jan 12 calls at a strike of 20, when the stock was trading around 15. My breakeven on the trade is $14 and if it above 20 next Jan, it will be a 112% gain.

An overwhelming majority of my portfolio is in oil producers. I believe oil will become progressively more expensive as we're running out of spare capacity and it's getting harder to find - and it's also an inflation hedge.

Right on! I have thought about owning the equity as well, but everything has to overcome my evidentiary standard that "stocks are for selling; bonds are for buying".

I agree about oil & gas. I think they are a great value relative to the other junk in the market.

That is an interesting question about munis. I am not a fan of bond funds - they are indiscriminate buyers of paper. I would much rather buy a small issue (like CPE) trading at a 15% yield when it should be trading at 5%.

Another reason not to own muni funds:http://online.wsj.com/article/SB10001424052748703561604576150792788023516.html

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